How are Open Banking APIs helping to simplify the payments experience

By Annapoorna


Updated on: Apr 21st, 2022


4 min read

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Open banking is a phenomenon growing around the world in the banking sector. Banks in India have started adopting open banking APIs to enhance customer satisfaction with various services. By partnering with fintech and third-party institutions, banks and organisations will look to thrive in a rapidly changing and competitive industry.

What is open banking API?

Open banking is a means of allowing third-party services to access customers’ financial data. This helps providers develop new solutions for customers and give them access to better banking products and services. An application programming interface (API) is a platform that allows interaction between two or more systems through a set of rules and protocols. Opening APIs will enable banks to exchange data with third parties digitally. This will be done with the permission of customers and necessary regulations to protect their interests. 

The aim of an open banking API for banks is to develop their technological capabilities to compete in the industry. This will also help prevent being overpowered by businesses with superior offerings. Through open banking APIs, banks can partner with third-party players and fintech entities in providing better services to customers than having to compete with them.

Who uses an open banking API?

Open banking API gives access to financial data, which can benefit many organisations and end customers. The following entities will look to benefit from open banking API:

  • Fintech entities: Short for financial technology, fintech allows integration of technology into financial products and services to improve customer efficiency and delivery. With the technology field rapidly changing, fintech entities look to provide innovative services to the public. Access to financial data via open banking API will help the fintech entities.
  • Non-banking businesses: Non-banking businesses can provide certain banking services to their customers by integrating them into their products. This can be done by using an open banking API. Businesses will benefit from this synergy, while not taking sector-specific licences to offer banking products.
  • Data analytics entities: Some entities specialise in data analytics related to financial services. Such entities will benefit immensely from open banking API, which can widen their scope to deliver more accurate analytics, which will benefit businesses.

Advantages of open banking APIs

With open banking APIs gaining recognition, the financial landscape is redefined in many ways. This will benefit the customers and providers. Open banking APIs are set to bring in the following changes:

  • Better user experience: Third parties will offer superior services to the public by collaborating with banks. Innovative solutions developed by entities can help people keep track of their daily lives by tracking expenses, preparing budgets, and getting insights into spending patterns. Higher data security and scalability will lead to an overall positive customer experience.
  • Higher quality of services by banks: By deploying open banking API, customers will be provided with services beyond the purview of traditional banking. It will significantly reduce the burdens of obtaining loans, getting new credit and debit cards, and switching between banks. Banks can develop better-suited services tailored to customers’ demands by using information regarding customer patterns.
  • Increase revenues: Open banking API will open new revenue streams for both banks and providers. Banks have a huge customer base and reputation. Fintech can innovate and develop products suited to customers. With both entities synergising their respective resources, there is an opportunity to generate higher revenue. Banks can also gather customer insights to help them develop better products and increase revenues. This can also attract new customers.
  • Banking as a service (BaaS): Open banking APIs give rise to the concept of banking as a service, where other businesses can integrate banking products into their offerings. Businesses will offer digital banking services to their customers without hassles. 

Open banking APIs will revolutionise the financial sector by creating new opportunities for banks and non-banks. Data security measures and regulations are necessary to ensure order regarding data usage. Making open banking API available to businesses on an international level will also open new avenues of revenue.

About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more


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